Approaches to expanding procurement value.
In anticipation of our upcoming webinar with Spend Matters, Designing the Procurement Factory – Reinventing Procurement Through a Platform, I want to share some initial thoughts around the platform concept.
For me, the main difference between a Platform as a Service (PaaS) and a Software as a Service (SaaS) is about the capability of the platform to expand value at any time, using interconnected proprietary solutions.
A perfect example is a company most people in our industry are familiar with — Salesforce. The value lies not in the great capabilities of its CRM, but the capability of the platform to be extended and adapted to any customer need. It’s a great foundation that, once correctly implemented, can be used to continuously add value based on any requirement.
Platform agility to manage increasing complexity.
That’s the critical advantage. A platform has to be able to add turnkey apps at any time that solve many growing or complex business problems. Often, these apps can be directly from the platform provider. They can also come from third-party providers that have integrated their cloud applications with the platform, or consulting companies that have built very specialized add-ons that adapt to specific vertical markets (e.g., extending an existing app to manage very deep specialized needs).
How does this platform approach apply to procurement? The main benefit is that organizations can now think about continuous improvement. They can adapt simply by extending their solution to any need they have within the procurement chain, without having to go through an often arduous or pricey software implementation project. There are many up-and-coming technologies with the potential to transform the way companies operate in order to be more efficient. But only a platform can support this digital transformation.
Technology trends impacting procurement.
Of course, there is no shortage of other cloud technologies, from B2C to SCM, that are changing the way companies – procurement departments included – operate:
- Social networks and communication channels (e.g., Slack) that provide full real-time collaboration between professionals from different companies (including buyer/supplier relationships)
- Artificial intelligence (essentially machine learning) that can be used to assist users and make work much easier and faster while bringing new levels of control and predictive ability
- Advanced data analysis that quickly sifts the best data available without having to wait for a complex/rigid BI tool implementation
- E-commerce technologies that are being used to automatically get the best product at the right price at any time across more and more commodities
- Fintech technologies, bringing new levels of payment options, cash management and even security (blockchain)
- IoT, transforming equipment into “smart” devices able to communicate directly with an open platform (e.g., a printer that orders its own toner as needed, automatically)
Industrial-strength platform innovation
But, and even more relevant to our webinar, there are also platform examples coming from industry. For example, Industry 4.0, prevalent in Germany, moves manufacturing from stand-alone plants to fully integrated and interconnected micro-plants.
Also, the car industry, which moved to the platform concept years ago in order to increase production and efficiency (and to a degree, quality), is now seeing another iteration of innovation. This is embodied by Tesla, which is now bringing it to the next level by focusing improvements not on the car, but on how it’s made; the factory.
There is a lot that procurement can learn from these examples. Through a platform-powered procurement approach, organizations will be able to adopt and adapt the necessary digital requirements to support current needs while transforming to stay ahead in an increasingly complex world.
To get a closer look at some industry examples that support the platform-powered procurement approach, join our webinar with Spend Matters. Or see the future in action, and schedule a demonstration of the Determine Cloud Platform.